A Former Miami Dolphin Accountant’s Claim That His Employment Status Was Intentionally Misclassified, May Not Add Up in Federal Court

Jan 29, 2021 | Employment, Sample Issue

By Robert J. Romano, Assistant Professor at St. John’s University

On December 31, 2020, Ronald Katz, an accountant who once served as a vice president for the Miami Dolphins, filed a six-count federal lawsuit in the United States District Court, Southern District of Florida. Per his lawsuit, Mr. Katz claims that the NFL franchise misclassified him as an independent contract instead of an employee so that the team could avoid providing him with certain employee benefits, such as a pension and health insurance.

Mr. Katz, who from 2008 through 2016, earned approximately $600,000 a year while associated with the Dolphins, now, almost five years later, alleges that in addition to this salary, the franchise is responsible for paying him 100% of any pension and welfare benefits that he should have received if not for the misclassification, together with all costs incurred as a result of Mr. Katz obtaining these benefits on his own.

To determine whether or not Mr. Katz was misclassified as an independent contractor by the Miami Dolphins requires, under Florida law, a court to first review the terms of any and all written agreements between the parties.[12] If any provision of the agreement disclaims or refutes an employer-employee relationship in favor of independent contractor status, a court must respect that provision. However, if a party can establish that “other provisions of the agreement, or the parties’ actual practice, demonstrate that it is not a valid indicator of status,” the court may find otherwise.[13] Therefore, independent contractor or employee status in Florida “depends not only on the [written] statements of the parties, but also upon all the circumstances of their dealings with each other.”[14]

Absent a formal written agreement, as is presumed to be the case between Katz and the Miami Dolphins, Florida courts use the ‘right of control’ test to determine whether the circumstances and dealings between the parties rise to the level of an employee-employer relationship. The Florida courts have adopted a number of criteria to assist in making such a finding and such criteria include the following:
(a)   the extent of control which the master may exercise over the details of the work;

(b)   whether or not the one employed is engaged in a distinct occupation or business;

(c)   the kind of occupation, with reference to whether, in the locality, the work is usually done under the direction of the employer or by a specialist without supervision;

(d)   the skill required in the particular occupation;

(e)   whether the employer or the worker supplies the instrumentalities, tools, and the place of work for the person doing the work;

(f)    the length of time for which the person is employed;

(g)   the method of payment, whether by the time or by the job;

(h)   whether or not the work is a part of the regular business of the employer;

(i)     whether or not the parties believe they are creating a master/servant relationship; and

(j)     whether the principal is or is not in business.

A court, however, does not need to find that every factor “is so clearly present as to establish beyond argument of the arrangement between the parties.”[15] The Florida courts have instead found that the “extent of control” the employer has over the worker is the most important factor when determining whether a person is an employee or independent contractor.[16] Florida courts have defined control as “the right to direct what shall be done and how and when it shall be done.”[17]

Of course, both employees and independent contractors “are subject to some control by the person or entity hiring them. The extent of control exercised over the details of the work turns on whether the control is focused on simply the result to be obtained or extends to the means to be employed.”[18] “If control is confined to results only, there is generally an independent contractor relationship.”[19] By contrast, however, “if control is extended to the means used to achieve the results, there is generally an employer-employee relationship.”[20]

Per Mr. Katz’s complaint, he argues that the services he provided on behalf of Dolphins were integral to the team’s business, but, more importantly, were also assigned, directed, supervised, and controlled by the team’s management.[21] He claims employee status because the Dolphins gave him a company credit card, an office in both New York and Miami, and two email addresses. In addition, Mr. Katz asserts that he endorsed checks on behalf of the franchise, analyzed the team budget and cash flow, attended quarterly owners’ meetings, negotiated contracts and settlement reports, met with the Miami Dade County Budget Committee on behalf of the team and even helped refinance the stadium debt.[22] In total, Mr. Katz refers to twenty-four various functions that he performed on behalf of the Dolphins that evidence his position as an employee rather than that of an independent contractor.

However, even with his twenty-four various functions, Mr. Katz is lacking two vital elements that may hinder a successful legal outcome against the Dolphins: a contract and credibility. A court will be hard pressed to find that Mr. Katz was business savvy enough, in part, to “review, negotiate and execute contracts on behalf of the franchise”, but not savvy enough to negotiate and reduce to writing the employment agreement between himself and the Miami franchise.

The question becomes, over the eight years that he was associated with the franchise, how was it that he was so sophisticated a business person to both “[n]egotiate numerous refinancing transactions for the stadium, including the negotiation of letters of credit for the tax-exempt portion of the debt” and “[r]eview an execution of 2010 NFL financing transaction and swap agreements to convert fixed rate debt to floating rate based upon three-month LIBOR”[23] , but not so sophisticated a business person to negotiate and execute an employment agreement that would provide him a pension and health benefits?

In addition, Mr. Katz may lack credibility. In 2016, he was convicted of tax fraud and lying to the IRS which resulted in him serving nine months in a federal prison. According to federal court records, he concealed approximately $1.2 million in personal income, while also helping a fellow tax professional hide over $3 million in income from the IRS.[24]

It is not clear how Mr. Katz’s criminal history will impact his current litigation, but that being said, without a written employment agreement he will have a difficult time proving to the court the extent of control the Dolphins had over him that would allow for it to find that he was misclassified as an independent contractor. And without such a finding, he will not be awarded any retroactive pension or health benefits, nor will he be reimbursement for costs incurred as a result of him obtaining those benefits on his own.

[12] Keith v. News & Sun Sentinel Co., 667 So. 2d 167, 171 (Fla. 1995).
[13] Id.
[14] Cantor v. Cochran, 184 So. 2d 173, 174 (Fla. 1966).
[15] Miami Herald Publ’g Co. v. Kendall, 88 So. 2d 276 (Fla. 1956).
[16] Verchick v. Hecht Invs., Ltd., 924 So. 2d 944, 946 (Fla. 3d DCA 2006) (“It is well-established that the main test in determining the existence of an employer-employee relationship is whether the employer has direction and control over the employee.”).
[17] Herman v. Roche, 533 So. 2d 824, 825 (Fla. 1st DCA 1988).
[18] Harper ex rel. Daley v. Toler, 884 So. 2d 1124, 1131 (Fla. 2d DCA 2004).
[19] 4139 Mgmt. Inc. v. Dep’t of Labor & Emp’t, 763 So. 2d 514, 517 (Fla. 5th DCA 2000).
[20] Id.
[21] Case 1:20-cv-25338-XXXX Document 1 Entered on FLSD Docket 12/31/2020 / paragraph 20.
[22] Id. Paragraph 19.
[23] Id. Paragraph 19.
[24] https://news.yahoo.com/dolphins-win-one-former-vp-223300055.html

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